In a bid to increase access to credit across the country, Nigerian micro-lending startup QuickCheck is using machine learning to credit-score borrowers.

Launched in July of last year, QuickCheck has developed a fully automated online platform that, based on algorithmic correlation, can disburse loans within seconds. The probability of default is estimated based on details provided by the applicant and non-traditional data gathered from the device, such as mobile manufacturer to variables extracted from social networks created using SMS and calls.

“Our ultimate goal is to be a digital bank in the customer’s pocket where they can get very cheap loans, save, take advantage of the power of group buying, and perform basic banking needs,” said Bola Martins-Kuye, the startup’s co-founder and chief executive officer (CEO). “Our idea is to reach the previously financially underserved through a micro-lending system, and build financial profiles for them, hence ensuring financial inclusion. There are over 54 million financially underserved in Nigeria. This is a large market which traditional banks can’t solve due to bureaucracy, lengthy process and huge demands for collateral and low returns for the work required.”

QuickCheck is backed by Seedstars World, which over the last 11 months has invested US$311,000 in debt and US$100,000 in equity into the company to help it develop its algorithms. Since then, it has had over 40,000 users and 93,000 applications. “We have over 10,000 good customers who always pay on-time, with over 60 per cent of them being returning customers,” Martins-Kuye said.

The startup is currently only operating in Nigeria, but plans to expand to other emerging markets in Africa – such as Ivory Coast and Egypt – within the next year.

“Being a data-driven company, we constantly perform analysis both on the loan data and user experiments to figure out what’s our best move. We found the market to be highly receptive to the idea of a mobile bank, in addition to easy credit access, and that’s where we are headed,” said Martins-Kuye.

QuickCheck lends between US$15 and US$100 at an interest rate of 1% daily for a maximum of 30 days. So far, the company has generated over US$100,000 in revenues, but Martins-Kuye said it still has a long way to go. “We see small loans as a “trojan horse” strategy to get into people’s smartphones, and then get them to use us as their digital bank. We want to be Nigeria’s largest retail bank, without any physical branches,” he said.

QuickCheck has a dedicated credit collections team, all credit collection officers are locals who understand the local psychology. There is no outsourcing – this is a critical activity that we keep in-house. It has refined the collection processes based on costs . QuickCheck’s major competitors are microfinance banks.

These types of loans are issued by close to 600 institutions across the country, and they are essential to the functioning of the economy . That’s why they exist in Nigeria and in the broader emerging markets. Without them, 90 per cent of the banked population would not get loans, neither would 100 per cent of the unbanked. “But there is still a lot of bureaucracy involved,” said Martins-Kuye, “We believe in equal access to finance, where it should be cheap and serve a purpose”.